2. We conducted our audit, in accordance with auditing standards, generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Manufacturing and other Companies (Auditor's Report) Order 1988, issued by the Company Law Board, in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in the said order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, proper books of account as required by the Companies Act, 1956 have been kept by the Company so far as it appears from our examination of such books.

c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account.

d) In our opinion the Balance Sheet and Profit & Loss Account, comply with the Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956.

e) Based on the representations made by all the Directors of the Company and the information and explanation as made available. Directors of the Company do not have any disqualification as referred to in clause (g) of sub section (1) to section 274 of the Act.

f) In our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and the Profit and Loss Account read together with the notes give the information required by the Companies Act, 1956 in the manner so required and gives a true and fair view:

i. In the case of Balance Sheet, of the state of affairs of the Company as at 30th June 2003.

ii. In the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date.

                                              For V. SUBRAMANIAN & CO.
                                                 Chartered Accountants

                                                        V. Subramanian
                                                            Proprietor

(Referred to in para (1) of our report of even date)

1. The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets. As explained to us all the assets have been physically verified by the management during the year. In our opinion the frequency of verification is reasonable. No material discrepancies were noticed on verification.

2. None of the fixed assets have been revalued during the year.

3. Physical verification of stock has been conducted by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable.

4. The procedures of physical verification of stocks followed by the management is reasonable and adequate in relation to the size of the company and the nature of its business.

5. No material discrepancies were noticed on physical verification of stocks.

6. The valuation of stocks is fair and proper and is in accordance with the generally accepted accounting principles and is on the same basis as in the previous year.

7. As per information available to us, the company has not taken loans, secured or unsecured from firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956 or from the companies under the same management as defined under sub-section (1B) of section 370 of the Companies Act, 1956.

8. As per information available to us, the Company has granted loans to Companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956 or to the companies under the same management as defined under sub-section (1B) of Section 370 of the Companies Act, 1956. The terms of such loans are not prima-facie prejudicial to the interest of the company.

9. Interest free loans or advances in the nature of loans have been given to companies in the course of business at terms which are not prima facie prejudicial to the interests of the Company. The interest free loans to employees are being repaid as per stipulated terms.

10. In our opinion and according to the explanations given to us, there is an adequate internal control procedures commensurate with the size of the Company and the nature of its business, for purchase of stores, plant and machinery, equipments and other assets.

11. In our opinion and according to the information and explanations given to us, there were transactions of sale of goods, materials and services, made in pursuance of contracts or arrangements required to be entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating to Rs. 50,000/- (Rupees fifty thousand only) or more in respect of each party. These transactions have been made at prevailing market prices or the prices at which transactions for similar goods and services have been made with other party.

12. The Company has a system of determining unserviceable or damaged stores, raw material and finished goods on the basis of technical evaluation and in our opinion, adequate provision for the loss has been made in the accounts.

13. The Company has accepted deposits from the public within the meaning of Section 58A of the Companies Act, 1956 and the company has complied with the provisions of this section and the rules framed thereunder and also the directives of the Reserve Bank of India.

14. In our opinion, the Company has adequate internal audit system commensurate with its size and nature of its business.

15. The Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956.

16. According to the records of the Company, Provident Fund dues have generally been regularly deposited during the period with the appropriate authorities.

17. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty and Excise Duty as at 30-06-2003 were outstanding for a period of more than six months from the date they became payable.

18. According to the information and explanations given to us, and the records of the Company examined by us, no personal expenses have been charged to revenue account, other than those payable under contractual obligations or in accordance with generally accepted business practice.

19. In the case of trading activities of the Company, damaged goods have been accounted as per prudential accounting practices.

20. In our opinion, the Company's system of allocating man-hours utilised to the relative jobs considering the size and nature of its business needs to be strengthened.

21. The company is not a sick industrial company under the meaning of section 3(1)(O) of the Sick Industrial Companies (Special Provisions) Act, 1985.

22. The provision of clause 4(A) (xiv) is not applicable to the company.

                                              For V. SUBRAMANIAN & CO.
                                                 Chartered Accountants

                                                        V. Subramanian
                                                            Proprietor